SAN JOSE, Calif., March 23, 2007 (PRIME NEWSWIRE) -- CoSine Communications, Inc. (Pink Sheets:COSN) today announced revenues of $1,361,000 and a net income of $449,000 or $0.04 per share for the year ended December 31, 2006 as compared to revenues of $3,315,000 and net loss of $1,218,000 or $0.12 loss per share for the year ended December 31, 2005. Revenues for the quarter ended December 31, 2006 were $128,000 and net income was $595,000, or $0.06 per share, as compared to revenues of $934,000 and a net income of $325,000 or $0.03 per share for the three months ended December 31, 2005.
Net income for the quarter and year ended December 31, 2006 included a $640,000 gain on liquidation of foreign subsidiaries. The gain is due to the cumulative effect of gains and losses of converting foreign subsidiaries financial statements into United States dollars. This gain, which had been deferred prior to the year ended December 31, 2006, was recognized in 2006 with the liquidation of the subsidiaries.
CoSine's strategic plan is to redeploy its existing resources to identify and acquire new business operations. As a part of its strategic plan, CoSine completed the sale of its intellectual property and closed its customer service operations effective December 31, 2006.
About Cosine Communications
CoSine Communications was founded in 1998 as a global telecommunications equipment supplier to empower service providers to deliver a compelling portfolio of managed, network-based IP and broadband services to consumers and business customers. CoSine has ceased its customer service operations effective December 31, 2006. CoSine's strategic plan is to redeploy its existing resources to identify and acquire new business operations. CoSine's redeployment strategy will involve the acquisition of one or more operating businesses with existing or prospective taxable earnings. This strategy may allow CoSine to realize future cash flow benefits from its net operating loss carry-forwards ("NOLs"). As of this date, no candidates have been identified, and no assurance can be given that CoSine will find suitable candidates, and if it does, that it will be able to utilize its existing NOLs.
Safe Harbor Warning
"Safe Harbor" Statement under the Private Securities Litigation Reform Act of 1995: This release contains forward-looking statements, which include, among others, statements concerning CoSine's expected financial performance, exploration of strategic alternatives, and business outlook, expected performance and developments. CoSine uses words such as "anticipate," "believe," "plan," "expect," "future," "intend" and similar expressions to identify forward-looking statements. These forward-looking statements are subject to certain risks and uncertainties that could cause actual results to differ materially from those reflected in the forward-looking statements.
Factors that might cause such a difference include, but are not limited to, Cosine's ability to identify and effectuate desirable strategic acquisitions, the time and costs required to explore and investigate possible transactions and other corporate actions, management and board interest in and distraction due to exploring and investigating strategic alternatives, the reactions, either positive or negative, of investors, competitors, customers, employees and others to CoSine exploring and executing possible strategic acquisitions. A detailed discussion of these factors and other risks that affect CoSine's business is contained in its SEC filings, including its most recent reports on Form 10-K and Form 10-Q, particularly under the heading "Risk Factors." Readers are cautioned not to place undue reliance on these forward-looking statements, which reflect management's opinions only as of the date hereof. CoSine undertakes no obligation to revise or publicly release the results of any revision to these forward-looking statements.
CoSine Communications, Inc.
CONSOLIDATED STATEMENT OF OPERATIONS
(in thousands, except per share data)
Three months ended Twelve months ended
Dec 31, Dec 31,
2006 2005 2006 2005
------------------- -------------------
Revenue:
Product $ -- $ -- $ -- $ 216
Service 128 934 1,361 3,099
-------- -------- -------- --------
Total revenue 128 934 1,361 3,315
Cost of revenue 194 504 1,663 2,049
-------- -------- -------- --------
Gross profit (loss) (66) 430 (302) 1,266
Operating expenses:
Research and
development -- -- -- 103
Sales and marketing -- -- -- 105
General and
administrative 410 402 1,316 3,227
Restructuring
and impairment
charges (credits) -- -- -- (91)
-------- -------- -------- --------
Total operating
expenses 410 402 1,316 3,344
-------- -------- -------- --------
Income (Loss)
from operations (476) 28 (1,618) (2,078)
Interest income and
expense and other, net 1,019 162 2,015 632
-------- -------- -------- --------
Income (Loss) before
income tax benefit 543 190 397 (1,446)
Income tax benefit (52) (135) (52) (228)
-------- -------- -------- --------
Net Income (Loss) $ 595 $ 325 $ 449 $ (1,218)
-------- -------- -------- --------
Basic net income
(loss) per share $ 0.06 $ 0.03 $ 0.04 $ (0.12)
Diluted net income
(loss) per share $ 0.06 $ 0.03 $ 0.04 $ (0.12)
Shares used in
computing basic net
loss per share
Basic 10,091 10,091 10,091 10,094
Diluted 10,096 10,091 10,096 10,094
CoSine Communications, Inc.
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands)
December December
31, 2006(a) 31, 2005(a)
--------- ---------
ASSETS
Current assets:
Cash and cash equivalents $ 5,207 $ 12,417
Short-term investments 17,650 10,749
Accounts receivable, trade 55 96
Other receivables 68 209
Prepaid expenses and other
current assets 56 119
--------- ---------
Total current assets 23,036 23,590
Long-term deposits -- 250
--------- ---------
23,036 23,840
--------- ---------
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 320 $ 237
Other accrued liabilities 239 874
Deferred revenue -- 126
--------- ---------
Total current liabilities 559 1,237
--------- ---------
Total liabilities 559 1,237
--------- ---------
Stockholders' equity:
Common stock 1 1
Additional paid-in capital 538,987 538,947
Accumulated other
comprehensive income 17 632
Accumulated deficit (516,528) (516,977)
--------- ---------
Total stockholders' equity 22,477 22,603
--------- ---------
23,036 23,840
--------- ---------
(a) Amounts are derived from the December 31, 2006 and 2005 audited
financial statements.